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Posts tagged Debt
Debt Consolidation Programs – Pros and Cons
Jul 21st
There are many people who swear by the advantages and benefits of debt consolidation programs. On the other hand, there are many who feel that it has been overrated. So, should you choose debt consolidation or should you skip it? There is no universal answer to this question. A lot depends on nature of your financial problems.
If you are skipping credit card repayments because you simply forget that you owe money, consolidation will be a good idea. If you are paying high interest despite a low interest rate regime in the market, a consolidation program makes sense. If you do not have sufficient income, consolidation is not going to work unless it reduces the installment down to manageable levels.
The biggest advantage is that it puts more money in your pocket by helping you save on interest. Secondly, it makes it easier to manage your debts. Thirdly, it improves your credit score because total number of debts owed come down. Fourthly, it gives you breathing space that you can use to improve your financial condition and planning.
The biggest disadvantage of a debt consolidation program is that you do not enjoy a real reduction in debt. The percentage of discount offered is very nominal. If you are not in position to repay the money, your financial problems are only going to worsen. Secondly, the decision to convert ten $5000 credit card debts into a single $45000 debt can backfire. There is a possibility that the lender many initiate legal action if you default on repayment for month or two. Since the amount is very big, reaction of lender to even minor transgressions will be quick and harsh.
Finally, there always is the risk of dealing with a fraudulent of debt consolidation service provider. This can put a spoke in even the most well laid out plans.
Military Debt Consolidation Advice is an educational resource for those wanting to learn more about debt consolidation. Military personnel are the focus, but anyone in need of financial assistance will find the right advice.
Get Out Of Debt Now!
Jul 8th
If you can’t bring yourself to cut up your credit cards, try setting them aside at least and using cash as much as possible. Try carrying around a set amount of cash to use each week. We make better purchasing decisions when we actually have to hand over cash plus it limits what you can spend. Getting out of debt will become easier when we run out of money, we stop spending it’s that simple. When the only way to purchase is plastic, buying online for instance, then use your debit card. Your debit card can also be used as an emergency substitute for cash should you run out.
Close accounts that are no longer necessary or needed. Having unused credit available from lenders with whom you’ve had a long relationship will help boost your credit score. Having too many will harm your credit score. As a rule, 3 credit cards is what works best and try to never spend more than 50% of the available credit on any of the cards. This will keep your score at it’s highest. You should also consider closing all your retail store cards, if you need to make a purchase then use your credit card and pay it off at the end of the month.
Lowering Your Interest Rates
Start by reducing what you pay in interest. Start by calling current credit card companies and explaining that we intend to transfer our balance to another issuer unless our interest rate is lowered. Almost all credit card companies run promotional programs with low or 0% interest. They will be willing to put you on one of those rather than risk losing your business. All you need to do is at least try and ask. Try getting your credit card balances down. Finally you need to develop a strategy for paying off our existing credit card balances.
Gather all your credit card statements together and make a simple table listing the entire amount you owe, and the minimum payment and interest rate for each card. This will help determine the order in which we should pay off our cards. Focus on the highest interest rate cards first and pay off as much as you can each month while making only the minimum payments on our other cards. When the first card is paid off, use the same strategy on the next-highest interest rate card and so on until you’re debt-free. Over time these tips will help you once again be debt free.
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